Eastwick Produces and Sells Three Products -
Fixed Costs Total $200,000

question 24

Multiple Choice

Eastwick produces and sells three products. Last month's results are as follows:
$\begin{array}{llr} &\text { P1 } &\text { P2 } &\text { P3 } \\ \text { Revenues } &\$100,000&\$200,000&\$200,000\\ \text {Variable costs } &40,000&140,000&80,000\end{array}$

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Fixed costs total $200,000. What is Eastwick's break-even sales volume? (Assume the current product mix.)

• A) $500,000.
• B) $416,667.
• C) $384,615.
• D) $460,000.

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Definitions:

Arbitrage Pricing Theory

A theory that designs to predict the price of assets by considering the relationship between a financial asset's returns and the macroeconomic factors that directly affect it.

Expected Return

The anticipated value or profit generated by an investment over a given period, factoring in all potential outcomes and their probabilities.

Systematic Risk

The danger that affects all investments within an entire market or a specific sector, commonly referred to as market risk or non-diversifiable risk.

Treasury Bills

Short-term government securities issued at a discount from the par value and pay no interest.